Obama's Dangerous Game

Readers were greeted this morning by news that President Obama, the Democratic president, sometimes called the first liberal US president in almost half a century, is proposing cuts to Social Security in this years budget. This shouldn't come as a great surprise. These are the 'chained CPI' cuts we've heard about for a while as what the president would be willing to put on the table in a so-called 'grand bargain.' So what's going on here?

I know this news really hits TPM Readers right between the eyes. And that's a very reasonable reaction. So I wanted to take a moment to try to put this into context as I understand it.

First, though I think these cuts are a bad idea, they're are qualitatively different from efforts to dismantled and phase out Social Security through privatization and private accounts. There are also a number of progressive economists and policy analysts that think this might be a positive step in the context of other changes to get the country's longterm financial house in order. But that last point is key: it doesn't make sense if you just do it alone, if Social Security doesn't get anything back as part of the same bargain. Otherwise, when you do finally come to a deal that brings major new revenue in (and it will come) Social Security and other similar programs will be asked to take yet more hits.

At the same time, all the rigamarole about 'chained CPI' and what's the most accurate way to gauge increases in cost of living and all that is really beside the point: these are cuts. If you're getting a smaller benefit check than you otherwise would have in 2031 it really doesn't matter if there's some economists' analysis that says that's the amount you should have gotten in the first place.

Second, on the politics, President Obama and his advisors have made clear this isn't what President Obama is actually for. He doesn't think it's a good idea. It's rather what he's willing to do if Republicans are willing to make a big move on revenues. So he's anticipating claims that he's not serious about long term cuts and making clear that he's willing to put real cuts, painful cuts that most of his supporters will hate, on the table. There's an internal logic there. But the problem is that there doesn't seem to be much of any evidence that Republicans are going to make that any kind of move like that. So really this is just the President negotiating with himself, validating the wisdom of big Social Security cuts while Republicans are still saying -- and show no signs of not saying -- that no more taxes should ever go up ever.

Now, the counter to this is that the optics of going the extra length helps the President with swing voters who want to see he's trying to compromise. I'm uncertain about that. But that's certainly part of the calculus.

But there's the third point that I think is most important to understanding what's going on here. This isn't only about President Obama's negotiating acumen. In conversations with the president's key advisors and the President himself over the last three years one point that has always come out to me very clearly is that the President really believes in the importance of the Grand Bargain. He thinks it's an important goal purely on its own terms. That's something I don't think a lot of his diehard supporters fully grasp. He thinks it's important in longrange fiscal terms (and there's some reality to that). But he always believes it's important for the country and even for the Democratic party to have a big global agreement that settles the big fiscal policy for a generation and let's the country get on to other issues -- social and cultural issues, the environment, building the economy etc.

This has always struck me as a very questionable analysis of the where the country is politically and what it needs. But I put it forward because I don't think these moves can really be understood outside of this context.